Lord Fraser of Carmyllie: My Lords, it is my understanding that the Commission intends to bring this proposal forward under Article 100a which would mean that qualified majority voting would be the order of the day. It is nevertheless right that we should go forward with the consultation I have indicated. I am already very much aware of the strong representations that has come from the major auction houses in London setting forward their opposition to it. I understand that there are others who would purport to act, or may indeed act, for artists and their representatives who might take up a different point of view. I think it only right that we should carry forward that consultation.

Lord Jenkins of Putney: My Lords, is the noble and learned Lord aware that the opposition to droit de suite comes exclusively from the fat cats? So far as concerns the artists, this is right and is supported by all right thinking people as being a means whereby the artist is able to have a small share in the increasing value of his work. Therefore, it is my hope that the noble and learned Lord will not be influenced by the opposition that has been expressed, from wherever it has come, and will consider the matter on its merits. If he does that, he will accept it.

Lord Fraser of Carmyllie: My Lords, as I have indicated in my previous answers, I am well aware of the strong representations from major auction houses in London. I do not think that their views are to be set aside. London enjoys a worthwhile pre-eminence and I very much hope that that can be maintained. The noble Lord makes my point for me. I indicated that it was right that on the proposal coming from the Commission there should be proper consultation. It is a rather extraordinary position that in some countries in Europe where this droit is already allowed it is nonetheless not implemented. That seems to be the least satisfactory of all positions.

The Earl of Gowrie: My Lords, I declare an interest as a director of an auction house. Will my noble and learned friend reiterate to the noble Lord, Lord Jenkins

1 Apr 1996 : Column 9

of Putney, and others that this is not an issue that is going to affect the auction houses themselves, simply the locations in which they conduct their business? Is my noble friend aware that it is not universally accepted by artists that this programme is in their interests? In the very unfortunate event of there being a qualified majority vote on this issue, can we for once copy our European partners and ignore it?

Lord Fraser of Carmyllie: My Lords, my noble friend will not be surprised if I do not answer directly his last point. The substance of what he has to say is right. It is not that artists or their heirs may receive something that they would not otherwise have received. The greater likelihood is rather that the sale of those works will not be undertaken in London or within the European Union, but the sales will be displaced either to the United States, other than to California, where no such right exists or, alternatively, they may take place in Switzerland.

Lord Haskel: My Lords, is the Minister aware that there are other differences apart from the 3 per cent. droit de suite levy in the art market between France and the United Kingdom? For instance, is the Minister aware that in the United Kingdom there is 2.5 per cent. VAT, but in France it is 5 per cent.? Is he further aware that in France dealer commissions are limited to 9 per cent. by law, and in the United Kingdom dealers can charge up to 15 per cent.? Will the Minister take these matters into account when conducting his consultations? Does he agree that harmonisation would bring real competition to the art market in the European Union?

Lord Fraser of Carmyllie: My Lords, I am not clear that I understand from the noble Lord's question whether he is in favour of the introduction of this measure into the United Kingdom. I am sure that in a supplementary question he will make it clear from the Opposition Front Bench where exactly he stands on this issue. I would have thought that there was little within the operations of the commercial auctioneering firms in France that we wish to copy. The only good news that has come out of that is the announcement by the French Government that, after considerable pressure, its market will be opened up on 1st January 1998. That is a welcome development; but we should like that date brought forward.

Hong Kong and Taiwan

3.2 p.m.

Lord Skidelsky asked Her Majesty's Government:

Whether, or to what extent, the recent actions of the Chinese Government in respect of Taiwan have altered their expectations of what will happen in Hong Kong when it is transferred to China next year.

Baroness Chalker of Wallasey: My Lords, the positions of Taiwan and Hong Kong are very different. Under the terms of the 1984 Sino-British Joint

1 Apr 1996 : Column 10

Declaration, Hong Kong will return to China in 1997, and China has guaranteed the continuation of Hong Kong's way of life for 50 years.

Lord Skidelsky: My Lords, I thank the Minister for that reply. Does my noble friend agree with me that China's recent bullying of Taiwan and its determination to scrap the recently elected LegCo, to replace it with an appointed body and to extract a pledge of loyalty to that body from Hong Kong's senior civil servants raise serious doubts about its commitment to freedom and democracy? I ask my noble friend specifically what steps, if any, the Government intend to take to protect the existing LegCo and the electoral arrangements which created it, beyond the date of the handover of Hong Kong to China next year.

Baroness Chalker of Wallasey: My Lords, we are all well aware that the Chinese exercises against Taiwan were intended to influence the Taiwanese electorate in the run-up to the presidential election on 23rd March and to try to condition the approach of the victor to the China-Taiwan contacts. I believe that the scale of the exercises discredited once and for all China's earlier emphasis on peaceful reunification. Certainly, the bullying did not work. I understand my noble friend's serious doubts, but it is perfectly clear, as my right honourable friend the Prime Minister said to the Chinese Prime Minister at their meeting in Bangkok on 29th February, that our view is that the members of LegCo, elected last year, should be allowed to serve their full four-year term. We have told the Chinese that there is no justification for the establishment of a provisional legislature. We shall continue to urge them to reconsider this. Meanwhile, we stand by our commitment to work with the legitimate legislature, which is LegCo. We shall certainly continue to keep the interest in this matter, which has been expressed by many friendly countries, and we shall watch very carefully what is happening.

Baroness Blackstone: My Lords, perhaps I may pursue the question of the noble Lord, Lord Skidelsky, a little further with the Minister. Can she say what the British Government's response is to the latest move by the Chinese Government in demanding that Hong Kong civil servants support the Peking-appointed provisional legislative council after takeover? Have any representations been made to the Chinese Government since the Prime Ministers' meeting in Bangkok at the end of February?

Baroness Chalker of Wallasey: Yes, my Lords, we have made it quite clear that any move to create a conflict of loyalties would be damaging to the confidence of the Civil Service and for Hong Kong. We have made inquiries of the Chinese. We continue to find out exactly what they are seeking to say. As soon as we have a better understanding of what they are saying, apart from their threats, I shall be able to say a little more. We are well aware of the very serious implications of their remarks should they be carried through.

1 Apr 1996 : Column 11

Lord Avebury: My Lords, will the Minister confirm that the recent missile tests and military exercises in the neighbourhood of the Taiwanese coast by the Chinese authorities constitute a breach of the United Nations Charter which prohibits the threat of the use of force? Can she say what mechanism exists within the United Nations' system for countering these threats of aggression where the aggressor itself is a permanent member of the Security Council?

Baroness Chalker of Wallasey: My Lords, the supplementary question of the noble Lord, Lord Avebury, goes a little wide of the Question. All I can say to him is that these matters have not gone unnoticed. They are being discussed in New York, as I heard last week. No doubt the Security Council will, in its wisdom, come up with one of its famous answers.

Lord Wilson of Tillyorn: My Lords, does the Minister agree that despite some anxieties in Hong Kong which are understandable, and a good deal of friction with China, the development of Hong Kong remains remarkable? Does she further agree that there are many people in Hong Kong who are determined to make a success of the arrangements which come into force next year and the new relationship with China that that implies, and that this is an attitude which deserves support?

Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord, Lord Wilson of Tillyorn. He knows better than anyone how determined the Hong Kong people are to make a success of the economy which they have built up. When one meets businessmen, and even those from China, they too want to share in a similar success in the Special Administrative Region. Therefore, these people are to be praised and encouraged. We must carry on doing that. It is quite remarkable how confident people are. I saw that for myself last year. We should do everything we can to encourage that confidence and do nothing to undermine it.